Mississauga property taxes could rise by hundreds of dollars a year due to Bill 23: Mayor Crombie

Mississauga Mayor Bonnie Crombie is sounding the alarm about the potential impact newly passed legislation could have on property tax rates in the city. 

At a recent press conference, Crombie told reporters that the Ontario government’s Bill 23 (More Homes Built Faster Act), which recently received royal assent, could cost the municipality up to $885 million over 10 years and add hundreds of dollars to the average household’s property tax bill. 

“That’s equal to losing 20 per cent of our capital budget,” Crombie said. 

“The numbers are devastating. And they’re baffling and deeply concerning. Where is this money going? Allegedly to developers to encourage them to build more affordable housing.”

The bill, which passed earlier this week, has drawn the ire of multiple municipalities across the province. While the bill is designed to help spur the creation of more housing–including affordable and non-profit housing–it has drawn intense criticism for its pledge to freeze, reduce and exempt fees that developers typically pay to towns and cities. 

Those fees, known as development charges, are used to pay for services to support new homes, such as road and sewer infrastructure and community centres.

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The Association of Municipalities of Ontario says the changes could leave municipalities short $5 billion and see taxpayers footing the bill – either in the form of higher property taxes or service cuts. 

Property taxes could climb by hundreds of dollars

At both the press conference and a Nov. 30 budget committee meeting, Crombie said the bill could prompt the average property tax bill to climb by five to 10 per cent–or approximately $300 to $600–a year over the next decade.

“This is before any other budget pressures are applied…It also doesn’t include the impacts to the Region of Peel,” Crombie told reporters. 

The Province says that by eliminating fees on specific projects such as affordable units, some “attainable” units and non-profit developments, it will incentivize developers to build more housing and rectify the persistent supply issues that it believes are keeping prices high across Ontario. 

“We have a housing crisis driven by lack of supply. The average home in Brampton cost $1 million as recently as August, and we all have to step up to deal with it,” Graham McGregor, MPP for Brampton-North, told insauga.com.

McGregor said the average municipal development charge in the GTA is $116,900 and that that cost is factored into the price of new housing and therefore passed onto the homebuyer.

“If you take that $116,900 and you put it over the course of a 20-year mortgage at 5.69 per cent interest, that turns into more than $800 a month for somebody’s mortgage payment and that’s just development charges alone,” McGregor says. 

“What we’re trying to do is incent more construction.”

McGregor said that development charges on market-rate housing are not being reduced, but he did not say what the price threshold was for a development to be considered “affordable” and, therefore, exempt from development charges. 

“Development charges on market housing are not being decreased; only [charges] on purpose-built housing, affordable housing and non-profit are being lowered [or eliminated]. Non-profit and affordable, we’re removing development charges entirely. Our hope is that by reducing the cost of building the type of housing we need to see, that will incent the construction and increase the supply.”

“No guarantee” that developers will reduce purchasing costs

At the press conference, Crombie said there’s no guarantee in the bill that developers will be required to pass cost savings onto purchasers. 

“There is no guarantee in this legislation that the savings that are being given to the developers will be passed on to the homebuyers. Let me be clear, the market dictates the price of homes. Under Bill 23, property taxpayers will be funding developer profits,” Crombie said. 

“While we can agree and certainly appreciate the Province’s desire to incentivize affordability, it can’t be done on the backs of cities and our taxpayers.”

When asked about concerns from municipalities, McGregor said cities such as Brampton and Mississauga already have healthy development charge reserves and that both have raised development fees significantly since 2020–21 per cent and 27 per cent, respectively. 

“The City of Brampton has a development charge balance of $235 million,” McGregor told insauga.com, adding that Mississauga has a reserve of $271 million as of 2021. 

At the press conference, Crombie said the money in reserves has already been earmarked for capital projects and the city isn’t just sitting on the funds.

“The Province continues to argue that municipal fees are adding over $100,000 to the price of an average home of the GTA and that we are sitting on large amounts of reserves, which is just not true,” Crombie told reporters. 

“These reserves are earmarked for our capital projects. The large infrastructure projects like bridges, transit, fire stations and community centres that keep our city running and make it a great place to live. We don’t collect money we don’t need and we plan 10 years in advance because we need to save money to build projects of this magnitude.”

The mayor also said that the bill will make it harder for Mississauga to welcome more affordable units to the city. 

“Our city’s goal was to build 10 per cent affordable [housing] and this actually reduces the amount of affordable housing or what the province is calling attainable housing, which would be built. So from 10 per cent, down to five per cent. And ‘attainable’ has not yet been defined.”

McGregor says the legislation will help get 1.5 million housing units built in Ontario over the next 10 years.

“We know if we build 1.5 million [homes] over the next 10 years, it’ll regulate the entire housing market in Ontario. The supply of houses is not meeting the demand but the changes will incentivize the construction of more affordable, non-profit and purpose-built rental housing,” he says. 

When asked how the province will ensure this target–which differs from municipality to municipality–is met, McGregor didn’t provide specifics.

“We’ve committed to introducing a housing supply action plan every year over the next four years so we can work to get shovels in the ground and get homes built. These will be opportunities for us to adjust the plan as it rolls out,” he says, adding that municipalities need to move beyond NIMBYism and “step up.” 

“We need to make standing with NIMBYs as politically inconvenient as possible. New immigrants, millennials and seniors are being priced out of the market. All of us have a duty to get this done.” 

City would welcome an audit

At the press conference, Crombie said cities need to be compensated for the significant losses they’re set to accrue and said she would welcome an audit of Mississauga’s finances to show that the municipality only collects what it needs to function. 

“I would welcome the opportunity to correct the record and run the province through our numbers. We are fiscally responsible in Mississauga,” Crombie told reporters. 

“I would also welcome a similar commitment [that Toronto received] that Mississauga be compensated for any losses from Bill 23. We want to work with the province to achieve our shared goal of addressing affordability and building more homes. We just need to get on the same page as to how we get there and I’m confident that we will do just that by working together with the provincial and the federal government.”